Dark Days: Vulnerable Europe faces crisis of confidence

Europe is in a very dark place. Under the cloud of on-going terrorist threats there is widespread fear of what the future holds – economically, socially and politically.

Jeremy Warner writing for the Telegraph yesterday describes the ‘abyss’ into which we are sliding and how this is precisely the reaction that the terrorists had hoped to elicit, despite the fact that – “even in Israel, citizens are far more likely to be the victim of a car accident than a terrorist outrage”.

Despite the initial bravado and defiance of the population in the immediate wake of such attacks, there is inevitably always a knock-on effect. “Most people will indeed carry on as before, but it only takes a 10pc reduction in footfall to have quite marked economic effects.”

“Yet it is to the wider geo-political impact of terrorism that we must look for the longer-term economic consequences.

In providing a pretext for war in Afghanistan and Iraq, 9/11 ended up having a massive economic impact far beyond any immediate behavioural changes.”

“The fiscal costs alone of these wars were vast. On its own, Iraq is estimated to have cost the US $1.1 trillion, and that’s ignoring myriad after conflict costs, which compound over time.”

“The wars also triggered a series of interest rate cuts in the US and beyond, helping to unleash a dangerous degree of credit expansion which ultimately culminated in the Global Financial Crisis (GFC). You can have guns or butter, it is sometimes said, but not both. America and Britain tried to have both, and paid the price.”